In a report from Citigroup financial analysts, the stablecoin market is positioned for massive growth. It might get to a $3.7 trillion market cap by 2030! This projection arrives alongside a macro climate of heightened regulatory tailwinds, more adoption of digital assets by traditional financial institutions, and an overall return of interest in digital assets. The current stablecoin market cap has already surpassed $230 billion in April, a 54% jump since last year.

Tether (USDT) and USDC (USDC) currently control the vast majority of the stablecoin market, making up an estimated 90% of its total value. However, Citigroup's analysis suggests that regulatory changes could spark significant adoption of stablecoins and blockchain technology as early as 2025. Out of nowhere, on April 23, a group of Citigroup banking analysts released a report. They described a number of possible trajectories for the stablecoin space.

The report highlights that a clear US regulatory framework for stablecoins would support demand for dollar risk-free assets both domestically and internationally. Such a framework would result in stablecoin issuers likely holding more US Treasuries by 2030 than any other jurisdiction does currently.

"The tailwinds of regulatory support and the increased integration of digital assets into incumbent financial institutions are setting the scene for increased usage of stablecoins," - Citi

Citigroup cautions that challenges remain. The report flags more than 1,900 cases of depegging so far in 2023. Most impressively, it captures the severe USDC depeg caused by the collapse of Silicon Valley Bank. If these adoption and integration challenges remain as ongoing headwinds, the stablecoin market cap might find a long-term equilibrium closer to $500 billion.

"2025 has the potential to be blockchain’s ‘ChatGPT’ moment for adoption in the financial and public sector, driven by regulatory change," - Citigroup financial analysts

In a more moderate scenario, Citigroup predicts a base case of $1.6 trillion for the stablecoin market cap by 2030. The analysts’ other big takeaway is that the market may be driven by geopolitical factors.

"Geopolitics remain fluid. Should the world continue to drift into a multi-polar system it is likely that policymakers in China and Europe will be keen to promote central bank digital currencies (CBDCs) or stablecoins issued in their own currency," - Citi

By 2030, stablecoin issuers may even become one of the largest holders of US Treasuries. This development has the potential to really change the financial landscape in fascinating ways.

"Stablecoin issuers could hold more US Treasuries by 2030 than any single jurisdiction today," - Citi